Justice Kagan wrote the opinion for a unanimous Supreme Court reversing explaining that you can take a trademark-parody joke too far in JACK DANIEL’S PROPERTIES, INC., PETITIONER v. VIP PRODUCTS LLC.
VIP Products had marketed and sold a dog-chew toy with the mark "Bad Spaniels" using much of the same design elements, font, and shape of a bottle of Jack Daniel's whiskey. Jack Daniel's, not seeing the humor, sent VIP Prodcuts a cease-and-desist letter claiming trademark infringement. VIP Products filed a declaratory-judgment action in court arguing that its product was a parody of Jack Daniel's and had to be evaluated by the First Amendment framework established by the Second Circuit Court of Appeals in Rodgers v. Grimaldi. It wanted a judgement that its use of "Bad Spaniels" with various Jack Daniel's trademarked elements was not trademark infringement, but parody protected under the First Amendment and Grimaldi.
The district court did not agree. It found that the Rodgers test did not apply because VIP Products used the elements of the Jack Daniel's trademark not just as a joke, but as a trademark for its own products. The Ninth Circuit disagreed, reversed, and sent the case back to the district court. The second time around, VIP Products won on the parody issue. The case was appealed to the Ninth Circuit and affirmed, but Jack Daniel's pursued the case to the Supreme Court.
The Supreme Court found that the district court, in the first instance, got it right. You can take a trademark joke too far. In what can be described as a return to trademark basics, the Supreme Court centered its reasoning on the purpose of trademarks: to designate source or origin. The Court determined that, in this case, VIP Products was using the borrowed elements of Jack Daniel's trademarks to identify the source of its own goods.
In other words, VIP Products was using Jack Daniel's trademarks as trademarks for its own dog-toy products. This took VIP Products use of Jack Daniel's trademarks outside the realm of parody and Rodgers and squarely within the framework of trademark infringement.
So with respect to the trademark-infringement aspect of the case, the Court remanded the case for further proceedings to determine if VIP Product's use of "Bad Spaniels" infringed on Jack Daniel's trademarks. The Court did note that while the parodic aspects of VIP Product's "Bad Spaniels" trademark did not fall under the Grimaldi test, that it would be relevant in considering the likelihood of confusion, since it is less likely that a consumer would think a brand would engage in self-mockery.
With respect to Jack Daniel's dilution claim, the Court also reversed the Ninth Circuit's holding that the non-commercial-use exclusion in the anti-dilution provisions of the Lanham Act protected VIP Products use of "Bad Spaniels." Since VIP Products was using the parody as a brand, it was not a non-commercial use within the meaning of the statute. Thus, the Supreme Court vacated judgment of the Ninth Circuit on the dilution issue as well and remanded for further proceedings consistent with its opinion.
Hence, you can take a joke too far in trademark law. When you want to sell products or services that include parody, make sure that the joke is not your brand.